USTR's Punke delivers 'wake-up call' to WTO

GENEVA, Switzerland, April 11, 2013 – U.S.
Ambassador to the World Trade Organization (WTO) Michael Punke had strong words
today for members of the Trade Negotiations Committee: “There is an urgent need
for a serious course correction,” he said.

Punke’s comments come just a day after a WTO report found
world trade growth fell 3.2 percent in 2012 – from 5.2 percent in 2011 to 2.0 –
and amidst news that once-promising trade negotiations stemming from the Doha
round had failed to deliver.

Punke was especially despondent about current
state of agriculture trade negotiations. The ambassador criticized the body’s
“retreat to a ‘small package’” that “deeply disappointed” the United States
because of its failure to provide sufficient market access. He called current
state of agriculture trade “dire.”

Punke said the current proposals represented “a
step back” for global agriculture trade, and would create “a new loophole for
potentially unlimited trade-distorting subsidies.”

“We must not sit idly by as the WTO's negotiating
function hurtles towards irrelevance,” Punke concluded.

The full text of Amb. Punke’s remarks is below:

"The purpose of this stock-taking exercise is
straightforward: to sit together in one room and consider where we stand. It is
important that we do this, because without a common understanding of our
problems, we can’t solve them. The date for the 9th Ministerial Meeting is far
closer than it seems. And as many have said today, time is of the essence.

"And make no mistake; there is an urgent need
for a serious course correction. The last Ministerial Conference in Geneva in
December 2011 seemed to be a real turning point for the Membership of the WTO.
All 153 Ministers at that time took the important step of acknowledging that
Doha was at impasse, but also expressed a readiness to explore creative new
approaches, including interim results in discrete areas where progress might be
achieved, even against the broader backdrop of deadlock.

"Only three months ago, a diverse group of
Ministers met at Davos and pointed us in a clear direction - a small package
for Bali built around trade facilitation, an element on agriculture, and an
element on development. There was genuine hope that intensive work could
deliver such a result.

"Yet only three months later, the picture is
grim. While it is not my intention to throw bricks, I will be frank in our
substantive assessment of where various issues stand. That is the whole point
of 'taking stock.'

"On trade facilitation, we have not seen the
'meeting of the minds' that we might have expected would emerge. This is not
for lack of engagement. Indeed, for three months we’ve conducted scores of
meetings in every imaginable geometry, including intensive involvement by
experts, ambassadors, and recently with the assistance of respected 'friends of
the chair.'

"Certainly there has been an increase in
knowledge among participants, an increased understanding of the gaps. What has
not occurred is a narrowing of the gaps. Most concerning for the process, we
watched key players support converging positions one week, then step away from
the same position the next - a waste of precious time that calls into question
the utility of weeks worth of labor.

"Nor does there appear to be a meeting of the
minds on fundamental concepts. Perhaps most significant, we don’t even agree on
the threshold issue of whether the trade facilitation agreement will be
binding. This despite a ground-breaking proposal by the United States that
would allow developing countries to self-determine individual implementation
schedules according to their individual needs. This despite recent evidence
from one LDC, which generously shared the details of its UNCTAD-provided needs
assessment, that it might implement all of the obligations of a potential trade
facilitation agreement in not more than four years, and at a modest cost of $15
million. This despite the world’s multilateral, regional, and national
development agencies proclaiming, repeatedly, their readiness to provide
assistance.

"We all know that a trade facilitation
agreement will benefit all countries - the evidence on time and cost savings is
overwhelming. But these benefits will only accrue if Members are willing to
finalize a strong agreement and then to implement it.

"The situation in our agriculture
negotiations is even more dire.

"In this context, it is worth recalling the
fundamental nature of the exercise in which we’re engaged. Because we know that
major issues are at impasse, we’re aiming at a 'small package.' Small means not
everything. Or even a small piece of everything.

The need for a retreat to a 'small package' was
deeply disappointing to the United States, in part because the contemplated
outcome does not address top U.S. priorities of market access for agriculture,
manufactured goods, and services.

"Despite this disappointment, we have been
willing to consider putting elements of agriculture in a preferential position
- contemplating a near-term agriculture outcome even without corresponding
outcomes in NAMA and services. But for an outcome to succeed, it must be
modest. Without self-restraint by demandeurs, we will quickly find ourselves
back in the familiar territory of competing demands degenerating into standoff
and broader impasse.

"The G20 proposal last fall related to TRQ
administration represents the type of initiative that is calibrated to our
current context. We remain ready to address this proposal. While not perfect,
its scope does not call into question fundamental balances in the agriculture
sector, and it aims to promote trade. Nor is it technically difficult to
negotiate.

"The G33 proposal on stockholding of food put
forward by India is exactly the opposite. Many in Geneva have expressed
concerns about this proposal from the beginning, while also expressing
willingness to consider the proposal with an open mind. For four months the
United States and others have engaged extensively to learn more, even in the
face of incomplete information. But unfortunately these intensive discussions
of the proposal have revealed more causes for concern, not fewer.

"Frankly, the very essence of this proposal
is confusing and concerning. Since the beginning of the Doha Round, developing
countries have made clear that they view disciplines for the reduction of
trade-distorting agriculture subsidies as one of the fundamental goals of the
Round.

"Instead of creating new disciplines to
reduce agriculture subsidies, the G33 proposal represents a step back from
existing Uruguay Round disciplines – creating a new loophole for potentially
unlimited trade-distorting subsidies.

"This new loophole, moreover, will be
available only to a few emerging economies with the cash to use it. Other
developing countries will accrue no benefit – and in fact will pay for the
consequences. First, in the immediate term, when the governments using the
program buy up stocks, world prices will go up, making it harder for poorer
countries to meet their food needs. Later comes the inevitable problem of
miscalculation. Over the longer term, the lure of guaranteed prices that are
set before the planting season will draw more acres into production. If recent
history is repeated, more stocks will be created than anticipated, and the
surplus then will be dumped onto international and domestic markets – competing
with the products of countries which aren’t subsidizing – and lowering prices
that farmers around the world get for their commodities.

"These concerns are not based on abstract
fears, but rather numerous recent examples. Just last month, New Delhi Economic
Times reported that India was tendering an international wheat sale at a loss
of over $300 million, after it miscalculated its stockpiles and found it
necessary to dump surplus stocks on global markets. Another March article from
Mayank Bhardwaj, Reuters’ New Delhi correspondent, noted that the Indian
government’s broad effort to reduce stocks would “almost certainly drag down
further global prices.”

"It is ironic that this proposal comes under
a title of “food security.” Even if it did contribute to food security for the
two or three countries that can afford the costs to support such a system –and
this is debatable -- it will certainly create volatility and insecurity for the
vast majority of others.

"We, like many others in this organization,
find it unthinkable that one of our few agriculture deliverables at Bali would
be a step backwards from existing disciplines and cause more harm to
international trade and to those who most need its benefits. We cannot support
such an outcome.

"Constructively, some members of the G33
recently have acknowledged the widespread concerns expressed with regard to
their proposal and suggested a recalibrated proposal for Bali. We stand ready
to consider a new and more realistic proposal.

"Beyond the existing proposals, we are
concerned about rumors of yet more proposals on agriculture. We want to be very
clear in this regard. The G20 proposal seems to represent a fairly unique
example of an agriculture initiative that does not immediately call into
question the broader balances within the agriculture pillar - or with other
pillars. But we see no further prospect for cherry picking from the agriculture
pillar. Any Member insisting on a partial result in one part of agriculture
should be prepared to offer readiness for parallel cherry picking in the rest
of the pillar, for example, in agriculture market access. Or beyond the
agriculture pillar, for example in manufactured goods.

"Frankly, we are highly skeptical that
potential proponents are ready for this type of discussion, and so the likely
result, if we go down this path, will be continued impasse. Do we really want
to watch this movie again?

"The United States has also been actively
engaged in efforts to find development outcomes for Bali; though of course we
believe that trade facilitation represents the most impactful development
outcome. On the [Committee on Trade and Development -Special Session] issues,
however, we’ve seen the same failure to find a meeting of the minds as in other
areas.

"We have an opportunity with the Monitoring
Mechanism to create a forum for addressing Member-identified Special and
Differential Treatment issues, which we see as a useful tool. We want to see
developing countries succeed in their goals to implement WTO commitments, as it
is only through full implementation that developing countries reap the full
benefits of the multilateral trading system. But some Members are instead
seeking to establish a permanent mechanism to re-negotiate binding WTO rules,
which is simply not acceptable in a rules-based system.

"Against this frustrating backdrop, how can
we be anything but gravely concerned about the prospects for Bali? Some are
eager to engage in a discussion of the 'post-Bali agenda.' But the post-Bali
agenda can only be built on a foundation of a meaningful package of Bali
deliverables.

"The time has come to speak bluntly.
Remember, the Bali package is intended to be comprised of elements that are
relatively easier to deliver. If Bali fails, it is hard to imagine how Doha can
succeed. It defies logic to believe that, if we fail to deliver on the easier
issues that the WTO is capable of delivering on the more difficult issues -
issues at impasse now for more than a decade.

"Colleagues, it has been 12 years since the
Doha round began. Aside from the important plurilaterals, the WTO has failed to
deliver a negotiated, market-opening result in its almost two decades of
existence.

"We agree with many who have said that the
fate of Doha is inextricably linked to the fate of Bali. If Bali fails, the
signal that we will send, in a world full of fruitful trade negotiations, is that
the WTO is the one place where trade negotiations don’t succeed. At the recent
Geneva forum for Director General candidates, we found it interesting that all
nine candidates made a similar point.

"For the United States, we are committed to
every effort to avoid this outcome. We helped to build this institution as a
cornerstone in the foundational architecture of the post World War II
international system. Across six decades, 12 American presidents - six
Republicans and six Democrats - have labored to sustain it.

"It is precisely because we value the WTO so
much that the United States is insisting today: we must not sit idly by as the
WTO's negotiating function hurtles towards irrelevance.

"The glint of hope today is that we still
have time - though only just barely - to adjust our course. The institution we
care about is in crisis, and we need to act accordingly. We have two tangible
suggestions for making a change of course possible.

"First, we call for every delegation in this
room today to engage in immediate, intensive consultations with its capital.
The purpose of such consultations would be two-fold: to convey the seriousness
of the situation in Geneva, and to explore each Member’s readiness to
contribute demonstrably to breaking the current deadlock.

"Second, we call for intensive contacts among
Senior Officials and Ministers before the end of the month. The purpose of such
contacts would be to report back from capitals, allowing further assessment of
whether conditions have changed for moving negotiations forward.

"Work in Geneva can and must continue in the
time between now and the end of April. In trade facilitation, for example, the
new Friends of the Chair have the potential to provide a vital conduit between
small configurations and the larger negotiating group. In agriculture, the
Chair has set out an active schedule as has the Chair of the CTD Special
Session. We have every process that should be necessary in Geneva for us to
make progress.

"But every process is an empty vessel without
substance from the capitals to fill it. Between now and the end of April, that
is our collective task.

"There has been too much talk in Geneva about
whether Doha is dead. The more relevant discussion should be: what are the
tangible steps that each and every one of us is willing to take to save it?

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